In 2007, 10% of large firms say they are very or somewhat likely to eliminate subsidized coverage for some future retirees, according to a new survey of 302 large private-sector employers conducted by the Kaiser Family Foundation and Hewitt Associates. Large employers also say they will require retirees to pay more for their health benefits next year: 64% said they will increase retiree contributions to premiums, 26% will increase cost-sharing requirements, 20% will raise drug copayments, and 18% report that they will raise out-of-pocket limits. At the same time, 78% say they will offer drug coverage to their retirees and accept subsidies from the federal government to offset some of those costs.
The survey also assesses the cost of retiree health coverage for new retirees. Overall, employers report a 6.8% increase in total retiree health costs between 2005 and 2006--a rate of growth consistent with the increases reported for active workers in other studies and significantly higher than the rate of inflation during that period (4%). Some firms report taking steps to reduce the number of people eligible for retiree health benefits in the future. Between 2005 and 2006, 11% of surveyed employers eliminated benefits for a group of future early retirees and 9% did the same for a group of future Medicare-eligible retirees.
